Tbo Tek Ltd (NSE: TBOTEK) Q3 2026 Earnings Call dated Feb. 11, 2026
Corporate Participants:
Vikas Jain — Chief Financial Officer
Gaurav Bhatnagar — Co-Founder & Joint Managing Director
Analysts:
Mr. Karan Uppal — Analyst
Mr. Pratik Kumar — Analyst
Mr. Manik Taneja — Analyst
Mr. Kavish Parek — Analyst
Mr. Chirah kacharya — Analyst
Divyansh Gupta — Analyst
Mr. Mateen Shah — Analyst
Mr. Amit Jain — Analyst
Presentation:
operator
Good evening everyone. I’m Vanessa Fernandez from the Ad Factors PR Investor Relations team. On behalf of TBO Tech Limited I would like to welcome you all to the earnings conference call for quarter three and nine month FY26. Today on the call we have with us from the management Mr. Ankush Nijhawan, Co Founder and Joint Managing Director. Mr. Gaurav Bhatnagar, Co Founder and Joint Managing Director Mr. Vikas Jain, Chief Financial Officer, Mr. Anil Barrera, Advisor, Mr. Akshat Verma, Whole Time Director and CTO and Mr. Parmendra Tomar, General Counsel and Mr. Shresth Jain Mahajan, Associate Director, Investor Relations.
We will begin the call with brief opening remarks from the management followed by a Q and A session. Please note that certain statements made during this call may be forward looking in nature. Such forward looking statements are subject to risks and uncertainties that could cause the actual results or projections to differ materially from those statements. TBO Tech will hold no responsibility for any such actions taken based on such statements and undertakes no obligations to publicly update these forward looking statements. I will now hand over the call to Mr. Vikas Jain for his opening remarks. Thank you.
And over to you, Mr. Vikas.
Vikas Jain — Chief Financial Officer
Thanks Vanessa. Good evening everyone and thanks for joining us. This quarter represents an important milestone in TVO’s journey as we integrate Classic Vacations into our financial and operating matrices for the first time. While the consolidation meaningfully expands the scale of our platform, it also adds complexity to how certain headline metrics should be interpreted. As a result, we believe it is important to provide shareholders with additional clarity regarding some matters regarding the accounting policy. Classic Vacation recognizes revenue from hotels and ancillary services on a check in basis unlike TVO Tech which recognizes such revenue at time of booking.
This treatment is consistent with Classic Vacation’s historical accounting practice and aligns with the nature of its business. Even the longer booking to stay window and continued post booking services until check in revenue from air transaction however is recognized at time of booking consistent with TBO tax policy. Accordingly, all revenue and related matrices for classifications have been reported on the above basis. While TBO Tech’s Organic Business continues to report revenue and matrices on a booking basis, revenue from operations of 784 Cr for the quarter translates into an enterprise take rate of 8.08%. The organic business delivered a take rate of 6.04% while Classic Vacations reported a headline take rate of 24.94%.
It is important to note that Classic Vacations take rate includes a 12.4% commission component that is passed to the travel advisors which is structurally much lower in tbo’s core platform. As a result, these take rate are not strictly comparable on a like to like basis and introduce noise into the blended take rate matrices. For this reason, we believe gross profit as a percentage of GTV is more analytically robust measure of value capture. Gross profit strips out pass through commissions and better reflects the net economic value retained by the platform. The second critical cause of platform health is the conversion of gross profit into adjusted EBITDA which reflects operating efficiencies and execution discipline.
Gross profit to adjusted EBITDA conversion at enterprise level stood at 23.7% for the quarter compared to 25.3% in Q3 of FY25. Within this, the organic business delivered a conversion of 25.3% while classic version of 19.6%. On a holistic basis, Enterprise GTV to adjusted EBITDA conversion improved to 1.18% in Q3FY26 from 1.05% in Q3FY25 supported by contribution from classic vacation which delivered a 2.46% GTV to adjusted EBITDA conversion for the quarter. Thanks. And with this I hand back the call to Vanessa for opening the floor for the questions.
Questions and Answers:
operator
Thank you, Mr. Vikas. We will now begin the Q and A session. Participants are requested to raise their virtual hands to ask questions. We request you to introduce yourself and the firm you represent before going ahead. We shall wait for a minute for the question queue to assemble. We have a first question from Mr. Karan Uppal. Mr. Karan, please unmute yourself and go ahead with your question.
Mr. Karan Uppal
Hi guys, can you hear me?
Gaurav Bhatnagar
Yes, we can.
Mr. Karan Uppal
Yeah. Yeah. A couple of questions from my side. Firstly, the air business recovered very strongly. 16% yy growth on an organic basis. So just want to check. How are you seeing, you know, the. The air business from here on, is the growth rate sustainable? That’s the first question.
Gaurav Bhatnagar
So Karan, as we don’t talk about forwards but yes, I can tell you that we are. We will continue the momentum in Q4 as well.
Mr. Karan Uppal
Okay. Okay. Secondly, you know this quarter we have Ramadan. So there is some distortion in the numbers because of this. Especially in the Middle east geography. So how are we thinking about, you know, the impact this quarter? It’s Q4FY26.
Gaurav Bhatnagar
See on a quarter to quarter basis Ramadan fell, you know, pretty much. In the same quarter last year as well. So while there’ll be a monthly deviation in numbers because Ramadan is standing February and March, this time last year it was completely in March. But from from a full quarter perspective there won’t be a very material change. The only difference is that there is an uptick in business towards the end of Ramadan and then going into the EID period. So that that will straddle, you know, that will startle the last, last, last year it was straddling the Q4 and Q1.
This time it is largely going to be within Q3, Q4. So that’s the only difference. It should not have a very material impact this time because it is all within the same quarter.
Mr. Karan Uppal
Okay. Okay, thanks Gaurav. Just one question. On, on Classic, how is the integration playing out? Any early signs of cross selling whether TBO business to Classic or Classic to tbo? Any early signs there?
Gaurav Bhatnagar
So TBO selling to Classic has already started. So we’ve done that integration and I would say that the early signs are quite promising because Classic has a very long booking window and a check in window. So when it starts to one convert into travel because there’s a long window between which this business can cancel as well. But the early signs are quite promising. The business, the Classic buying from Classic buying from TBO has. Well, I can’t share any numbers but it’s becoming meaningfully large. So if I were to look at Classic as a standalone customer of tbo, it will already be amongst like a top 20 customers.
Right. So from that perspective it is promising. TBO buying from Classic is going to start in a matter of time. There is a bigger integration that is required to enable that to happen. Apart from that, the overall platform migration is happening, but that’s a several quarters long project because it is complex and the system the legacy on the, on very legacy on the Classic side. So the platform migration will probably take two or three quarters but the cross sell from both the platforms will start sooner.
Mr. Karan Uppal
Okay. This last question to Vikas. Sir, Depreciation and finance costs have increased, inched up this quarter because of Classic integration. So from here on, should we assume these numbers to be steady state?
Vikas Jain
Yeah. So this quarter includes the DEB and amortization cost for the PPA provisional that we have done. We, we don’t while the PPA study is currently provisional, but we don’t anticipate major changes in the same. So the depth cost is already taken into account. The motorization cost is taking into account the cost which will get amortized for the CVPP and similarly the finance cost includes the full quarter cost for the loan that we had taken for the classical position.
Mr. Karan Uppal
Okay, thanks. Thanks a lot.
Vikas Jain
I’ll fall back and. Thanks Karan. Thank you.
operator
Thank you Karan. We have our next question from Mr. Pratik Kumar from Jefferies. Pratik, I requested you introduce yourself and unmute.
Mr. Pratik Kumar
Good evening and congratulations from Jeffries. First of all, may I request that the call be hosted slightly later in the day or like next day because you just posted results and shoulder letter like 10 minutes back. Just impossible to go through them and. Yeah, and. And discuss during the call. My first question is like 3Q again was impacted by forex element. How are we seeing the forex element now? And is there any changes in policy which we are introducing to reduce this impact on a sustainable basis?
Gaurav Bhatnagar
So year on year forex impact has reduced per se. If you see the overall number has gone down materially. Having however said that since till last year Q4 we were not doing any, any material hedging especially for our international business. And this as a practice we started after the Q4. So hedging would obviously involve some cost variant wherever in currencies where we have difference in payables and receivables and to cover that risk we would have to incur such cost and that cost is getting captured in that forex line per se.
Mr. Pratik Kumar
Okay, so it’s the hedging cost which is there and not the MTM impact or something which is part of that line item.
Gaurav Bhatnagar
So that line would have all the hedging cost as well as MTM impact of the hedges as well as if there are any unhedged positions, if there is any gain or loss that is also included. And plus since we had given a foreign currency loan from DBO Tech, the holding company to Tech Travel DMCC Dubai entity for the CV acquisition, any benefit or cost pertaining to the revaluation of those loan also get captured in this line.
Mr. Pratik Kumar
Sure. Okay. Second question is on CVs integration. So while of course last quarter was particularly impacted by integration cost, but is there any specific integration cost or some specific immediate synergy which we may realize like in 4Q versus 3Q and is there something specific which had impacted this quarter as well?
Vikas Jain
Pratik? Very early days. So the Q4 or you know what, our Q3 but calendar year Q4 for CV was in line with what they had projected as part of diligence. So it has played out as we expected it to. These synergies are like earlier mentioned that we already started selling the TBO inventory into cv. How that will materialize into incremental revenue or margin expansion is very early to say because like I said, the booking windows are very long. It will only be June, July, August, September when bulk of the travel will happen. So by that time we will know what part of the business that we booked today is actually materializing and is it materializing at a higher take rate.
So that is I think a few months away. The immediate synergies that we will see are likely going to be US TBO also buying from CV which should start happening in the next couple of months and then the broader benefits will happen when we migrate the core booking platform of CV onto the TBO ecosystem which like I said is a complex project. So that’s a several quarters long project. But that is where we will actually start to see both cost synergies as well as we are able to employ our TPO growth playbook onto the CV platform.
So that I think is a few quarters. For now we try and maintain a steady state and try and make sure that we accelerate our integration projects from a cost additional cost perspective. We don’t envision any additional cost for these integrations. We are managing it within our current resources.
Mr. Pratik Kumar
Thank you. Our question is on your commentary and expectation which we have like sort of given out earlier on revenue growth accident on on organic business revenue growth accelerating versus HGNA growth from exporter onwards. How are you looking at that comment now?
Vikas Jain
No Prateek, we stick to our conviction. We are expecting to see Q4 so you would have already seen that every quarter the the growth of SG area has been tapering down and we expect that to continue in Q4 as well. At the same time from Q3 to Q4 we usually see a significant growth in the top line because Q3 is traditionally our weakest quarter and Q4 is our second best quarter. So we expect to see a meaningful growth in top line in Q4 while the SGNA will not grow at the same pace and hence we should see a significant flow through to the bottom line.
So we remain convinced on that and that’s on the organic business not counting cv. So we should be able to demonstrate that operating leverage in Q4.
Mr. Pratik Kumar
And last question, is there any thought process around bringing both CVS and your accounting to same standards on top line GTV and EBITDA margins?
Gaurav Bhatnagar
Yeah Prateek, it is, you know we tried that but it is simply not possible. The main reason being that CVs business books much in advance and then because of the nature of that business. So it is luxury and complex. Right. So unlike the TBO business where each booking is essentially one hotel or one flight, bulk of what CV books is multi hotel, multi product itineraries. Now between the time when the booking happens and when the travel happens, the booking goes through several iterations in terms of people will add additional room, add a hotel, add an excursion.
So there is no point in time when you can nail down the revenue and say this is the revenue on this booking until the time the travel actually happens. So it would be hard to translate that into our book model where we when a rebooking is reconfirmed, we count it as revenue because of the nature of that business. So if we try to do that, I think we’ll create a fair bit of complexity. So we’ll try and run the business on an as is basis rather than, you know, try and force fit it into our business model.
Mr. Pratik Kumar
Sure. Thank you. And these are my questions.
Vikas Jain
Thanks Pratik. And Pratik, your comment, well taken on time so we were anticipating our board meeting to finish a lot sooner today and hence the delay between when we published. But we’ll keep that in mind going forward.
operator
Thank you Pratik. We have a next question from Mr. Manik Taneja. I request you to kindly unmute yourself and and proceed with your question.
Mr. Manik Taneja
Thank you for the opportunity. While I do understand this quarter’s performance is colored by the consolidation of the classifications business, but just stepping back on the airlines business, we have seen a strong DTV performance in the current quarter, unlike the weak seasonality that we typically tend to see in this business in this quarter. If you could spend some thoughts as to what drove the strong performance over here in this particular quarter and how should we be thinking about these trends on a go forward basis? That’s question number one. The second question that I have is with regards to EBITDA as a percentage of gtv which also has an impact of the classifications higher profitability, how should we be thinking about this metrics? If you were to think about over a two to three year period, those would be my two questions.
Gaurav Bhatnagar
On the air. I think there were some learnings, you know what which we obviously learned from in the last previous quarters. So we kind of fixed that. One thing good is that we did not compromise on our gp. We still maintained the same gp. What we were maintaining the same quarters but I think we did some things correct which we were wanted to. So I think that kind of played up in our favor. Also keeping in mind Manik this also had this disruption in December with one of the carriers which all of us know about yet.
We kind of pulled through with a good growth and we anticipate the same momentum, you know, as we go into Q4 and hopefully should be in the same lines at least double digits, you know. And I think that’s the plan what we have internally.
Mr. Manik Taneja
Just to clarify. Yeah, go ahead, go ahead. Yeah, yeah. So just on that double digit growth outlook from the air business, you’re saying Air GT will essentially grow in double digits over the medium term.
Gaurav Bhatnagar
I think let’s focus on Q4 at least a short term and then I think, you know, once we are, we have a confident on maintaining the momentum, then probably I can give a better color, you know, for the medium term as well.
Mr. Manik Taneja
Sure. Another question on. Yeah, yeah. How to look at EBITDA as a percentage of gtv. See the, you know the, the, it’s a, it’s, it’s a bit nuanced but directionally it will go in the same direction as EBITDA as a percentage of gp. What we are trying to anchor away is from looking at revenue as, as the top line metric because classic has a significantly large revenue but almost 50% of that revenue is a commission pass through to the travel advisors. So that’s not really, you know, income in the, in a, in a true sense of, true sense of the word.
So earlier the flow through from GP to revenue to GP conversion was quite high for the TBO organic business. But it is, it is materially lower for the Classic business and hence we are, what we are anchoring around is that the GP is a kind of true net revenue for us in a way. And from there on the operational efficiency of the business to convert that GP that into, you know, bottom line cash is a true representation of the business. So what one, we are anchoring around saying that let’s look at reven EBITDA as a percentage of GP to truly understand the conversion from revenue to bottom line.
We are also starting to, you know, talk about EBITDA as a, or adjusted EBITDA as a percentage GDP because that is a metric many of our peers are also using. The nuance there is that not all GTV is equal. As you know that the airline GTV while significantly large in volume, actually delivers much lower take rates. So it’s a bit, this number can fluctuate a little bit more than the EBITDA to GP number because in a quarter where we have high growth in the airline business, this number may actually shrink A little bit. So directionally in the long run, this number will move upwards in the same pace as EBITDA to gp.
But our conviction still remains that EBITDA to GP is a more consistent number to measure compared to EBITDA to gdp. No, sure, that’s quite helpful, Gaurav, just to prod you further, because that will basically show up the true value of the platform from an EBITDA to GP conversion. If you could give us some sense of your operating expenses below gross profit, what proportion of your broad other expenses or operating expenses below gross profits are essentially variable in nature, which will fluctuate in line with the volume of business to what may essentially be fixed cost.
Vikas Jain
Yeah, so Manik, as we have started disclosing the breakup of the SGA cost below gross profit level from I believe last year letter, we have shared those details in our letter as well. If you see there are broadly four or five components in that piece. So primarily the variable nature of the expense is hosting bandwidth cost and the payment gateway charges. So those that expense would primarily, would grow, primarily grow in line with the growth in the revenue of the GP or the GDP numbers. But the other cost, which is the employee benefit cost and the business support service and the others, those would primarily be looked at a fixed nature of cost and therein where we are seeing that operating leverage would get generated as we scale our business model.
Mr. Manik Taneja
Great, thank you. All the best for the future. Thank you.
operator
Thank you. Manik. We have a next question from Mr. Kavish Parek. We request you to kindly unmute yourself and proceed with your question.
Mr. Kavish Parek
Hey, thanks for the opportunity. This is Tavish Parikh from bnk. My first question is on classifications at the investor event. You outlined a roadmap highlighting certain low hanging initiatives, some of which you have already started to tap into while benefits remain some time away. Do you have any timelines in mind with respect to execution here? And how would you envisage the growth trajectory for Classic over the next, say three to four years? That’s the first question.
Gaurav Bhatnagar
Okay, so Kavish, like I said that the lowest hanging fruit is cross sell on both sides. Cross sell from TBO into Classic has already started and we are seeing quite promising results. Cross sell from Classic into TBO is a few months, a few weeks away because requires a little bit of work on the tech. The other big integration that we are working on is the platform migration where we will introduce our booking platform into the Classic ecosystem. That’s a several quarters long project. It will be a phased out project as well. So the Benefits of it will start to accrue probably in in H2 and not before that over a three to four year period.
Kavish, the way to think of growth is not just on the Classic but the overall North America business for tbo. And that was our investment thesis at the beginning as well. What has happened with classic is that one we have gotten access to about 10,000 active high luxury travel advisors in the North America market. The second access we have gotten is access to very deep consortia relationships in that market, namely virtuoso signature travel leaders, travel savers, etc. So both these are relevant for unlocking growth in the core TVO business and the organic TPO business as well.
So our view would remain that we will expect over the next three or four years our North America business to continue to grow at in double digits just like all other geographies have demonstrated growth in the early phases. With a caveat that we already starting with a large base. Right? So for example you would see today markets like APAC or Europe are growing a good north of 30%. But coming from a smaller base, APAC is coming from a base a couple of hundred million dollars. Now in North America we’re already starting with a base of more than $600 million.
But having said that, we would definitely endeavor to find high double digit growth in North America as a whole over the next three or four years. Now some of it may come in the TPO organic business and some of it may come into the Classic business. But from our perspective, the value of this acquisition and the ROI on this acquisition will be measured by finding that growth for North America as a whole, not just standalone Classic on standalone tpo.
Mr. Kavish Parek
Fair enough, understood. Thanks for the detailed explanation. My second question is on the margins. So you have indicated that EBITDA growth is expected to outpace GP growth starting next quarter. Here, should we interpret this largely as a function of operating leverage at Classic, where EBITDA growth would inherently exceed GP growth as scale improves? Or would organic business be the larger contributor? So further on absolute margins, while TBO standalone margins could potentially reach around 17 18%, classic had margins of about 11% last year. So should we expect this to act as a drag on consolidated margins in the near term? Or what are the thoughts on Classic’s margins converging closer to tbo’s levels? Any timeline, any indication here would be great.
Yeah, that’s the second question.
Gaurav Bhatnagar
Kavish, on your first question, the Q4 growth that we’re talking about is pure operating leverage on the organic business. So Obviously with Classic consolidation the numbers will look larger. But what we have been committing for the last couple of quarters is that we will demonstrate significant operating leverage and flow through of incremental GP to bottom line in Q4 and that is on the organic business and we’re sticking to that commitment. So on the organic business we will see a significant margin expansion happen hopefully in, in Q4. Now you’re on your other comment. You’re right that the classic business, if you looked at as a percentage of revenue, feels dilutive and which is why my previous comment that we the true, you know, representation of the business will be looking at ebitda conversion from GP and which is more in line with the TVO business.
Vikas Jain
Right. Both are about mid 20s. Right. Classic is 20% and we are at around 25. Yeah. So the classic business is converting from GP to EBITDA at about 20%. TBO business is converting to at about 25%. And this convergence, we do expect that to happen. I don’t, I can’t give you a timeline right now, it’s very early days. But we do expect to see efficiencies and Classic has the same operating leverage. I think the business from a cost basis is, you know, is fully paid for in the sense that maybe there’s some incremental sales team expansion that will happen on the Classic business but we are not expecting the cost in that business to grow substantially.
So any incremental top line growth will convert heavily into the bottom line and hence this margin expansion should happen. So while I don’t have a timeline for it, we would expect for EBITDA to GP to EBITDA conversion to converge for the TVO core business as well as classic.
Mr. Kavish Parek
Got that, got that. Lastly, on our take rates. So organic TBO hotel take rates have remained strong for several quarters now while the geographical mix has been largely st. What is really driving the sustained strength organic TV hotels? Has there been a shift in the underlying hotel mix towards more premium categories? And if so, how sustainable are these takers? Because historically we have seen some volatility in this matrix. So any color on that stability would be helpful. And if I can just squeeze in one more, could you share some color on what drove the sharp jump in the others revenue segment? So is this the new initiatives that you have been trying to grow or does this also pertain to classic?
Gaurav Bhatnagar
Okay, so on your first question, Kavish, I think part of the take rate fluctuation that you see is also in a similar nature on at the revenue level as what we are Explaining on classic because some of our suppliers are commissionable suppliers. So what happens is we receive a commission on every booking and then we part of a portion of that commission to the travel advisor, which gets netted off at a GP level. So a more fairer and kind of more honest view would be to look at GP as a percentage of GTV as against revenue as a percentage of GTV to get a more consistent view of take rates.
Having said that, we have worked hard to maintain take rates at a fairly consistent level. Part of it is that there are smaller businesses like the ancillary businesses which operate at a slightly higher take rate. So while they’re small in size, they do add a few pips to our overall take rate, you know, as they grow faster than the core hotels business. Second is that in certain quarters where the mix between our enterprise business and our retail business moves towards the retail business, the take rates also improve at that point. And then we have incremental bottom, you know, incremental margins that we are accruing because of the programs like the platinum program which we have talked about in the past.
So the platinum program is a meaningful program right now and the override commission that we earn over there, they add to positively to our take rate. So that has allowed us to maintain or improve our take rates a little bit. What was your second question?
Mr. Kavish Parek
The other revenue segment, I think about 40 crores out of. Segment. If you see on the consolidated basis, it is obviously driven by some growth from the organic business. But prima facie those numbers have inced up primarily because of the classical consolidation. Understood. And you mentioned that there tends to be some variation in the mix between enterprise and retail. So is there some seasonality here that we have been seeing over these years in terms of the contribution from enterprise and retail customers?
Gaurav Bhatnagar
No, Kavish, there is no seasonality over there. What happens on the enterprise side is customers are large, so sometimes their business can be a bit spiky. Right. It can significantly go up or significantly go down and which just changes the mix by a few percentage points here and there, which will, you know, reflect in the overall take rate by a few bips.
Mr. Kavish Parek
Got it, Got it. Thank you so much. All the very best. That was it from my side.
Gaurav Bhatnagar
Thank you. Thank you.
operator
Thank you. Kavish. We have a next question from the line of Mr. Chirag Kacharya. Chirag, request you to kindly unmute yourself and proceed with your question. Yes.
Mr. Chirah kacharya
Yeah. So. So one question on other expenses breakup which you have given in the shareholders letter. If I look at the year on year time it’s almost 18 and fun about within person. And there’s a drop. Can you provide trajectory mark in next quarter?
Vikas Jain
We are not able to hear you properly.
Mr. Chirah kacharya
Hello, can you hear us? Hello?
Gaurav Bhatnagar
Better, but it could be a little louder. Chirag, please.
Mr. Chirah kacharya
Yeah, so what I was asking the other expenses line item, what trend one can expect in this because on year, on year it’s up almost 18. Whereas part one part of there’s a drop. So.
Vikas Jain
Yeah, so as I was answering the other question. So other expense breakup primarily contains the employee benefit and similar business support services and some other items. Also in these expenses, the two line items which we are showing hosting bandwidth and PG charges, that would be the line items which would grow in line more with the business revenue, let’s say. And the other expenses would as we scale up should show operating leverage.
Mr. Chirah kacharya
Yeah, thanks.
operator
Thanks Chirag. We have a follow up question from the line of Mr. Karan Uppal Karan. Kindly unmute and proceed.
Mr. Karan Uppal
Yeah, thanks for the follow up. Just one question. On the monthly transacting buyers number which you have mentioned, especially on the international side, it’s around 14, 880. So incrementally 2500 agents have been added versus what number you have given for the Classic, it is around 10k. So does that imply that only 2.5k are the monthly transacting buyers from Classic? Any any clarifications there?
Vikas Jain
No. So 10k is an annual. 10K is an annual number for Classic. So the quarterly number for Classic would be in range of around. Yeah, 2500. 3000 only. Keeping in mind Karan, that the average booking value of a Classic Travel Advisor is much, much higher than the average booking value of a, of a TBO core travel agent.
Mr. Chirah kacharya
Okay, so Gaurav, from whatever you are seeing, only 2500 agents basically transact on the platform regularly, Is that what you’re saying?
Gaurav Bhatnagar
On a monthly basis? Yes.
Mr. Karan Uppal
Okay. Okay, great. And another question was on the take rates. So on a. On a blended basis the. The take rate is at 8.8 and our 8.1. Sorry. And the hotel business is at 10.5. So from here on on a sustainable basis, should we expect these numbers to remain table.
Gaurav Bhatnagar
We would expect the numbers to remain range bound current because we are not anticipating any pricing action on our end and we also not expecting the saliency of the business to change dramatically over the next few quarters.
Vikas Jain
Yeah, but as highlighted by Gaurav, at times because of the supplier mix impact, the, the take rate for the hotel business may go up Down. But yeah. So GP is a, is a, is the right matrix to see.
Gaurav Bhatnagar
I think just to add to that. The 2400 number that you’re talking about. That is the average over the two. Over the three months. If you look at the unique agents who worked with us during the quarter. At Classic, that number will be closer to 3900.
Mr. Karan Uppal
Okay, great, thanks. Thanks a lot.
operator
Thank you, Karan. Before we proceed to the next question, a gentle reminder to everyone if you may have a question for the management or kindly request you to raise your virtual hands, we have our next question from the line of Mr. Divyansh Gupta. Divyansh, kindly unmute yourself before you proceed with your question.
Divyansh Gupta
Am I audible?
operator
Yes.
Divyansh Gupta
Yeah. Hey, congratulations on a good set of results. Wanted to understand, while the let’s say the revenue recognition policy of CV is different from us, how does the working capital work for cv? Is it also a negative? And on a consolidated basis, should the negative working capital situation improve further for us or how should we think about it?
Vikas Jain
Yeah, actually a classic vacations business because the window between the booking and check in travel happen is too large. So it’s a highly negative working capital business and it would obviously support in generating more negative working capital business at an enterprise level.
Divyansh Gupta
If you can give a numerical sense.
Vikas Jain
Numerical sense. Because since we are not publishing the balance sheet numbers right now, we will give more color on it in, in the March quarter.
Divyansh Gupta
Got it, Got it. And what would be our direct sourcing with and without CV for hotels?
Gaurav Bhatnagar
See, I think without CV our direct sourcing in this quarter was about 40%. CV has a significantly higher contribution or direct sourcing. I don’t remember the exact number, but maybe it’s in the range of about 80. 85% is the right 85. So CVs, CVs sourcing is 85 direct. TBO core is about 40% direct.
Divyansh Gupta
Got it. Understood. So linking the metric that you were saying that what let’s say you would track or what we should track is EBITDA to gp. First, one basic question. Does a higher direct sourcing reduces the gap between revenue to GP for us. Or. That is just purely which agent drives which kind of business?
Vikas Jain
No, no, I think that will not devanch. What happens is basically the big gap in the classics business on revenue to GP is a commission payout to the travel advisor. So that’s irrespective whether you book direct supply or you book third party supply, you will still pay a big commission to the travel agent. And that is what is right. Now while getting counted as revenue and then getting netted off in gp. So that will not change.
Divyansh Gupta
But I’m saying from a business fundamental perspective, does a higher direct sourcing give us any added advantage in our unit economics for a transaction or business?
Vikas Jain
Yeah. In the case of Classic, especially as it stands today, their commission or their take rates on their direct business are materially more than what they make on third party supply. In the case of tbo the number, the margin the difference is rather small because we are still trying to build on more volume homes and we have much larger number of hotels that we directly contract. But in the long run the strategy of direct contracting is twofold. One is to make sure that you have protection from over dependence on third party supply and second is yes margin expansion in the long run.
So some of the margin expansion that we talked about earlier and why take rates have been strong is because we are generating incremental income on our platinum portfolio and platinum portfolio is all direct supply.
Divyansh Gupta
Understood? Understood. And another data point question. What would be your enterprise to retail GTV or revenue mix and how does let’s say how much differential in the margin or realization for US.
Vikas Jain
GP revenue?
Gaurav Bhatnagar
So enterprise retail GTV for the tbo organic core hotel business is it around 50? 50.
Divyansh Gupta
Got it.
Vikas Jain
Classic is all, all actually retailed. All retail. Got it.
Divyansh Gupta
And what would be let’s say our take rate differential if can give a sense on it.
Vikas Jain
That we generally don’t publish the Vance at an GPL level there is not much difference.
Divyansh Gupta
Got it. Got it. Just two more questions on the contracts that we have with hotels. I’m guessing there will also be some slab based incentives depending on certain let’s say room nights that we that we enable for them. When does the payout of that happens and how does the revenue recognition follow for it?
Vikas Jain
So the revenue recognition would happen as per the terms of the contract if it is per booking or is it if it is per checking the revenue recognition would the incentives due from hotels or suppliers would happen as per that contract. The payouts obviously would happen once the period of the contract is over and the numbers are finalized at both end.
Divyansh Gupta
So revenue will all will mota. Mota will happen at the time of booking whereas payout will happen annually. I’m guessing.
Vikas Jain
Yeah, but at the time of booking or checking it would it can vary depending on the contract with the supplier.
Divyansh Gupta
Got it. And just last question. Given all the volatility in the forex exchanges and this is not regarding the loan that we took for cv, what is our hedging policy and how much of currency that we hedge and was there any, let’s say big benefit because of forex exchange in this quarter or.
Vikas Jain
Hit couple as per. As regarding the hedging policy, basically wherever we have difference in payments and collections it at a particular, any currency level, let’s say for an INR or an Euro or a gbp, we try to hedge the difference amount in the range of around let’s say 70 to 70%. We try to hedge that amount in any, any particular entity or market from the perspective of gain or loss which are accounted for in this quarter like we did made some gains on account of the revaluation of the loan that we had given to DBO Dubai.
Other than that, primarily on the revaluation we had a negligible gain or loss. Primarily the balance of the expense pertains to hedging related and conversion cost.
Divyansh Gupta
Good, got it, got it. Thank you, this is very helpful. I’ll join back the queue.
operator
Thank you. Divyansh, we have a follow up question from the line of Pratik Kumar. Could you please unmute yourself?
Mr. Pratik Kumar
Thank you. A couple of questions. Firstly your air segments organic take rate. Organic net take rate seems to be at multi quarter low. So is this like also obviously benefited the top line. I mean GTV growth getting faster like. Yeah.
Vikas Jain
In case of airlines at times the take rate is not in our control because generally the airline business works on a commissionable model wherein we receive commissions from airlines or the other partners. So but if you see the GP line, there is only a marginal decline, not, not a significant decline between different quarters, 1.1 to 1.2. That, that’s, that’s the kind of number which varies across different quarters.
Mr. Pratik Kumar
Meaning even the gross take rate is lower.
Vikas Jain
Yeah, yeah. So that’s what I’m saying. It is, it is 1.1 in this quarter versus a 1.15 in Q2 and a 1.2% in, in the last year, same quarter. So not a significant decline I would say in terms of the gp. In terms of the take rate you might see that see a higher decline but not in terms of a gp.
Gaurav Bhatnagar
I think what is important in the airline business is the gp. See, because that is something we still control. But the take rate is something which can move any direction depending on the airline. Right, but what is, what is important is that we, our intent is to continue our 1.1, 1.2 as a GP on the airline business. And if the growth has to come, Pratik, that’s a matter of Discounting. Right. So if we drop it to a point date we will start winning gtv. So that’s not the intent. So I think this is a true growth what we have demonstrated in Q3, maintaining our GPS.
Mr. Pratik Kumar
Well. Okay. Also can you discuss region wise growth expectation? Used to discuss earlier like region wise, like different geography wise. I know for quarter
Vikas Jain
we have shared that in our terror letter so and we have given region wise. I think we have given some regional growth numbers as well. You can go through and you can connect offline Pratik on this with me.
Mr. Pratik Kumar
Okay. And last question on when you comment on competition both in India and outside, how is it shaping up? Maybe, maybe in specific geography or otherwise.
Gaurav Bhatnagar
I don’t think there is any material change in the competitive landscape in the last few quarters, Pratik. You know things remain competitive as they were before. I would not say that anything has become more competitive or anything has become less competitive at this point in time. Pretty much status quo in
Gaurav Bhatnagar
some developers. It might be intense Pratik, but the fact remains it’s still the same. So I think it significantly changes on the comp side.
Mr. Pratik Kumar
Sure. Thank you and all the best.
Vikas Jain
Thank you.
operator
Thank you Pratik. We have our next question from the line of Mr. Mateen Shah, request you to unmute yourself and introduce.
Mr. Mateen Shah
Yeah, am I audible?
operator
Yes, you are.
Vikas Jain
Yeah.
Mr. Mateen Shah
Thanks for giving opportunity. So I would just like to know like who would be your comparable peers? You know, probably either in the listed category, Indian listed category or elsewhere. I think the closest peers would be Webbed web Travel group listed in Australia and HBX listed in Spain. The Expedia has a B2B business as well, but bulk of their revenue still comes from the B2C business. But beyond that I don’t think I can think of any other listed peers.
Vikas Jain
Even in case of HBX and web travel, they are primarily more into enterprise business. Correct. Than a retail kind of a business like us.
Mr. Mateen Shah
Yeah. So is it possible to quantify any particular market share percentage wise?
Vikas Jain
No, very hard Mithin. I think one, the markets are very large and very fragmented, so very hard to take a hazard. It will be hazardous to take a guess on market share.
Mr. Mateen Shah
And is it possible, you know, to quantify average revenue per employee?
Vikas Jain
I think we do. We share head count, we don’t share headcount.
Gaurav Bhatnagar
But again this revenue, this metrics may not give exact color basically on the basis of the nature of the business we are into, it’s not purely a sales driven business. So we do share our overall headcount including Classic. Including what all our consultants and retainers that we have is north of 2600 plus as of December end.
Mr. Mateen Shah
Okay. And, and as I, I guess one of the guys had already asked, you know, if it would be good, you know, if you can give percentage wise contribution, geography wise, you know, it will give us a better idea of how, how the business is shaping up in different geographies.
Vikas Jain
We do give GTV specifically for a hotels business the GTV numbers at a reason wise level and what kind of growth we have year on year. And we do provide some color on the commentary on the regions as well beyond that.
Mr. Mateen Shah
Yeah, understood. And last question, like how are we connected to, you know, guys like Mad Use and Raid Gain per se? Both are platforms that we connect to for supply. So these are intermediaries that help us connect to the supplier. So we are connected to both Amadeus, Ray Gain as well as many other gds and channel managers. Got it, got it. Thanks a lot for answering and once again congratulations on good set of numbers and wish you all the best. Really appreciate.
Gaurav Bhatnagar
Thank you.
Mr. Mateen Shah
Thank you.
operator
We have a follow up question from the line of Divyansh Gupta. Kindly unmute yourself.
Divyansh Gupta
Thanks for the follow up. One more basic question. My understanding, correct me if I’m wrong, is that the hotel booking process is not, let’s say a very smooth and automated process, but at least flights, given all the GDS and all other tech that surrounds it’s a highly automated flow. Is that understanding broadly correct?
Vikas Jain
The hotel booking process is also fairly automated. The only thing with hotels is that the post booking handling is slightly more complex on hotels compared to flights, but the booking process is largely automated.
Divyansh Gupta
Got it. So my question was actually on flights. So like we mentioned that let’s say we have a take rate of 1.1. If we go to 0.8, we can do larger volumes. So the question is that if the process is largely automated, Even with a 0.8% take rate and a larger base, we would see a very high operating leverage flow through. So am I missing something there as to why we would not want to pursue that strategy?
Gaurav Bhatnagar
Well. That 1.1 is a GP, so you’re right. I mean what you said, I understood the question. See for us it’s the tech, the platform which helps us, the efficiencies. Right. So if you see our headcount in the last three years in terms of our air ops etc, there’s been no increase. So the plan is to keep building GTVs which will obviously help us in our operating leverage, particularly for airline Business. Right. Because that’s more India centric, you know. And to be fair, you know, we can’t be mixing it with our hotel business at an enterprise level.
But you’re absolutely right for us is to. But should we dilute 0.8 and get more GTV? I don’t think that’s a plan, Divyaj, because it doesn’t work in the short and medium term, you know, because sooner or later somebody will match it and then so it’s better that we be consistent. The market also kind of appreciates that and we still rather grow in our early teens, you know, if we can grow more. But we are very happy to maintain our GP as well as some decent growth and obviously outbeat the market. Right. I think that’s more important as well.
Divyansh Gupta
Got it. And as you had mentioned that let’s say the biggest airline had a lot of turbulence in this in the last quarter and we grew. And anyways Indigo does a large own website sourcing so it’s a safe assumption that let’s say we are much more stronger with Air India and Akasa. I’m guessing Akasa is still a minor player but Air India is a bigger share of. We have a good relationship with Air India. Is that a fair statement to make?
Gaurav Bhatnagar
I think our relationship with airline supply in India is probably the best, be it any airline. For us, Indigo still remains our largest air carrier in domestic and specific. The disruption obviously kind of affected us. We could have gone, we could have grown faster than what we did. But absolutely very well poised with every airline flying within India as well as overseas so far. So I think from that perspective we are equal. Our focus remains in all airlines, you know, which are meaningful and we will continue to do that.
Divyansh Gupta
Got it. And just one data keeping question. What would be the working capital cycle for a flight and for a hotel X of cv?
Vikas Jain
So for hotels basically even in the organic business it’s a negative working capital cycle business because generally we would be paying near to the time of check in or after checking to hotels or suppliers but we generally would be collecting starting from at the time of booking till at the time of checking. So it’s a negative working capital business. Air is I would say almost a working capital neutral business kind of thing. We do have cricket credit from airlines for a week. We do pass on such kind of credit to a selected agents and to and so on and so forth but.
Gaurav Bhatnagar
We don’t fund the airline business.
Divyansh Gupta
Got it. And I think a couple of quarters ago you had mentioned that the time from booking to check in is seeing a compression because either because of geopolitical or might be various other reasons. Are you seeing that number stabilizing, improving, reducing any color you can throw on it?
Vikas Jain
I don’t think there is a major deviation. It has shrunk. It has shrunk but I don’t think it is. It is shrinking further. It seems to be stable at this point in time.
Divyansh Gupta
Got and is there any way and just one question that when let’s say I’m a customer, I am going through an agent and booking through tbo. Do. I get an option to let’s say like and this is a B2C portal experience that you pay something more, you pay something less upfront or you pay with something extra but you can pay at the hotel and where effectively the difference is the working capital financing. So as a TBO agent do I have that offer to give to our customers?
Gaurav Bhatnagar
We don’t do pay at hotel. We don’t do pay at hotel at all. It works in B2C but not in a B2B kind of a business business.
Divyansh Gupta
And any reason for it because you also give credit to our customer. But if we are collecting everything from the customer up front but then the credit limit should not exist right to the agents.
Gaurav Bhatnagar
So generally we will not be collecting upfront from the customers. At times we may allow travel agents to use the credit card of the customer on the pass through. Generally it would be that the travel agent would be making payment to us. He may be collecting or giving a credit to his end customer and that’s his his own call.
Divyansh Gupta
Yeah, I was talking TBO to agent credit.
Vikas Jain
Yeah. So TV to agent credit. We do, we do give depending upon the the credit assessment that we do for the travel agent. But I’m not able to understand your question.
Gaurav Bhatnagar
I think Divyansh is asking that if the credit card was charged directly by the hotel then the travel agent will not need credit and travel agent spokes will not see the business. But Devansh what happens is often travel agents are packaging the hotel along with many other things. So if now if each component has to be paid at destination then packaging is not possible. Hence mostly travel agents prefer a model where everything is paid for upfront and second is in many cases travel agents also choose their own commission on every booking depending on the propensity to pay and competitiveness of pricing which is also not possible if the customer directly pays at the hotel.
Divyansh Gupta
Got it. But my question was actually a bit different. So if if TBO does not allow pay at Hotel which means the customer will pay to the agent. Now he pays through credit card, he pays in cash. Doesn’t affect TB because TBO will say to the agent that you need to give because you have collected money. Is this relationship understanding? Broadly correct.
Gaurav Bhatnagar
Yeah. Yes.
Divyansh Gupta
So then why is there there a need for credit to be given to the agent? Because agent already has the money from the customer if he was not having money.
Gaurav Bhatnagar
There is also a mix of just not ledger business. Right. Agents are also serving corporate large itineraries, you know, groups incentives. Right. Which obviously require credit. So therefore the credit has to extend it especially to the players who are meaningful travel agents. You know, the largest travel agent partners.
Vikas Jain
Of ours and even in case of leisure travel as well. Travel agent has a set of customers and he would be offering credit to them as well. They are not for the walking customers. He may demand payment at the time of booking itself. But for his loyal set of customers he would be extending credit to them as well.
Divyansh Gupta
Okay. Got it. Understood. Understood. And what has been a actual ever write off last year write off on credit.
Vikas Jain
So we do provide give the provision for bad debt numbers in our financials. I don’t have that handy. But it is.
Divyansh Gupta
I was asking actual write off, not the provision provision. So you will do. But actual write off.
Vikas Jain
Actual write off is not. Not that material amount.
Gaurav Bhatnagar
I don’t recall.
Vikas Jain
But yeah, I can, I can, I can provide you that number.
Divyansh Gupta
Got it, Got it. Thank you.
operator
Thank you very much. We have a next question from the line of Mr. Amit Jain. I request you to unmute yourself before introduction.
Mr. Amit Jain
Thanks for the opportunity. Just want to understand one thing. A few quarters back we used to give a detailed cohort about the the transacting buyers. So how many let’s say if someone got onto our platform five years back. So how much he’s contributed whether he’s you know, on our platform or not. So something the kind of metric at the management level you are looking at between the old transacting bias and the new transacting bias.
Vikas Jain
Yeah, we do look at that number and I think we’ve shared that number in the and in the think even in the shareholder letter have been given. The number terms but in the GTV terms. So we have shared how much business is coming from new customers vs customers who were previously onboarded in the shareholder letter. In the annual report we share the data on on long term cohorts as well. That data will not change very materially on a quarter on quarter basis because you can’t compare it for the half year compared to the previous four years because then the numbers will obviously not be correct. So while we do that analysis on an annual basis, the number we have been sharing consistently is how much business has been contributed by travel agents added in the same year.
Which is basically a reflection of the, of the effectiveness of the investment we have been doing in the sales team.
Mr. Amit Jain
So Gaurav, just want to understand at your level, what is the kind of optimal number you are looking at? Just like in insurance, we used to have a persistency ratio, let’s say, how many policyholders remain with the insurance in the policy. So similarly in your case, what kind of number you are looking at ideally.
Vikas Jain
See, it is very hard to articulate a single number, Amit, because the business operates at a global scale and the nature of travel agent changes from geography to geography. For example, in, you know, densely populated but low income countries like Indonesia, India, you will see thousands of travel agents will come and go, but the throughput from each travel agent will be relatively small. So churn will be high. But if you look at markets like Western Europe and North America, then the stickiness is high. But and throughput is also high. So when you aggregate all of those numbers to come up with a single number is very difficult.
And hence the metric we really look at is every yearly cohort, is that cohort on the whole growing or not? So if I look at my cohort of travel agents added last year, have they meaningfully grown this year or not? Or the cohort that came in two years ago, has it started to, you know, grown at a slower pace than the last year? But is that cohort growing or not? So you can look at it a cohort as a whole, but you cannot look at, you know, a percentage of travel agents churning or not churning because that changes a lot depending on in that particular year.
Where did you add travel agencies? If you had thousands of travel agents in Indonesia, for example, visa with a few hundred in Europe, it’s a very different metric.
Mr. Amit Jain
And I think you’re rightly said because our interaction with few travel agents reflects in India, churn is quite high. As they grow in size, I think they move out of the platform and they start dealing directly with the suppliers. So is this confined to India or few Southeast Asian countries? Or you find some in other geographies this kind of churn, higher churn.
Vikas Jain
I mean, the example you are giving is actually not very frequent. Our churn usually happens. This may just be a travel agent sometimes reducing their share of wallet if they choose to do something direct Churn usually happens because of attrition in the sense the travel agency closes down because it there is no license required to start a travel agency or you are a one person started a travel agency, closed down, started again. So attrition causes more churn?
Mr. Amit Jain
No, I just asked. Actually our interaction was a very big travel agent and he was. Your wallet share was high but over a period of time it reduced and I can see the reason is that they started dealing directly with the suppliers. So I’m seeing this kind of risk. Do you see this is a risk which, which is you know, to our business.
Vikas Jain
If you see our numbers, our monthly transacting is 33,000. Right. What you’re describing is probably the top 1% or a top 0.1% of a travel agencies who will actually be able to work directly with the suppliers. The whole business model is dependent on a long tail of small businesses depending on the platform for accessing supply. So in our experience this is rarely a reason for churn. This may lead to some reduction of wallet share but churn usually happens either. They may occasionally happen because they just didn’t like the service but usually the churn is really a travel agent stopping business or you know, moving out of the that company and starting their own agency.
Gaurav Bhatnagar
Also Amit, sometimes we don’t expose our credit limits, you know, with a good partner also. So that kind of, also kind of, you know, ask them can be leakage for them to deal with supply directly. You know, that can be one of the reasons as well.
Mr. Amit Jain
Thank you, thank you so much.
Gaurav Bhatnagar
Thank you.
operator
Amit, we have a follow up question from the line of Chiragya. Can you unmute yourself?
Mr. Chirah kacharya
Can you hear me? Yeah. So I was just visiting the website of Classic Vacation. If I look at their UI and UX and web interface and if we.
Vikas Jain
Compare it with the what tbo’s current. You know, UI ux. Is there, is there going to be any change, I mean in terms of let’s say upgradation in the classic platform? That is question number one and second, the transaction advisors which, the numbers which we are providing, is there any concentration, let’s say some of the you know, advisors contributing materially more as a percentage of revenue to the top line? Yeah, this broad two question I have here.
Gaurav Bhatnagar
See the branding for Classic will remain distinct from the TVO branding because they serve as a different kind of customer. The underlying UI UX may change somewhat especially when the platform migration happens. Then the booking engines will look more similar to TPO but in classic brand and colors obviously But I don’t think we are trying to homogenize the two platforms at all. Right. They service different customers and you want to keep it that way. On your second question, I don’t think on the, on the whole there is any major concentration of, you know, business with specific customers.
Especially because Classic is a pure retail business. Right. There’s no large enterprise business over there.
Mr. Chirah kacharya
Okay. And the changes which you mentioned for the Classic platform, any ballpark capex figure if you can provide like that, we’re going to incur any such plan.
Vikas Jain
There is no incremental capex for it. Could be some in house capex for the IT work but not a substantial. It’s not substantial. It’s not substantial. Okay, thank you.
operator
Thank you. That was our last question for the evening. Thank you everyone for participating in the call. I would now like to hand over the call to Mr. For his closing remarks.
Gaurav Bhatnagar
Thank you everyone for taking us time, taking us time for our call today. One thing we definitely acknowledge that, you know, either we should have pushed the call today. Unfortunately our board meeting got a little delayed. So we’ll be mindful of that for our next analyst and earnings call so that we can send you the shareholder letter much in advance, you know. So my apologies for that. But thanks for joining in this evening.
Vikas Jain
Thank you. Thank you. Thank you.
operator
Thank you everyone.